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A Cleaner Environment Through Expanding The Domestic Ethanol Industry

Archived Backgrounder

A Cleaner Environment Through Expanding The Domestic Ethanol Industry

On November 26, 2004 the Premier announced that by January 1, 2007, gasoline sold in Ontario will contain an average of five per cent ethanol, as part of our government's commitment to reduced emissions and cleaner air across the province. We are also moving forward on an Ethanol Growth Fund that will help bring economic benefits to the province's agricultural and rural communities.

What is ethanol?

Ethanol is an alcohol produced by fermenting sugar or converted starch, usually from grains such as corn or wheat. It can also be made from cellulosic materials such as forestry waste (e.g., wood waste) and agricultural crop residues, or it can be derived chemically from ethylene or ethane. Ethanol is typically blended with gasoline.

Environmental Benefits of Ethanol

Ethanol-blended fuel has fewer emissions of particulate matter and carbon monoxide, compared with gasoline. Based on a life-cycle comparison (i.e., from the field to vehicle tail pipe), use of ethanol-blended fuel reduces greenhouse gas emissions that contribute to climate change. It also results in decreased tailpipe emissions of some toxics such as benzene. At the same time, emissions of aldehydes (such acetaldehyde) and oxides of nitrogen (NOx) are expected to rise slightly, although no known health impacts are expected.

Because the energy required to grow the ethanol feedstock is from natural sources, the fossil energy required to produce ethanol is less than the energy required to produce the gasoline that ethanol displaces.

Ontario's 2007 target for ethanol would reduce annual greenhouse gas emissions by about 800,000 tonnes and be equivalent to taking 200,000 vehicles off the road.

Ontario Ethanol Growth Fund

Building a domestic ethanol industry in Ontario could lead to investments of up to $500 million in rural Ontario, and create as many as 400 jobs. The key to accomplishing this is managing the risks associated with fluctuating corn, crude oil and ethanol prices. The Ontario Ethanol Growth Fund (OEGF) recognizes that need and will help investors to better manage those risks by allowing fluctuating levels of support from year to year.

The OEGF has four components.

  • Agri-Business Capital Grants will be available to offset a portion of the cost of constructing ethanol production facilities.
  • Agri-Business Operating Grants will be available from 2007 until 2017 to promote ethanol production by helping industry to manage fluctuating market conditions.
  • Regional Independents' Fund will provide financial support to independent gasoline distributors who currently blend ethanol and may need assistance to meet the requirements of the RFS beginning in 2007.
  • Industry Development Fund to help farmers, environmental and bio-based businesses create research and investment opportunities in the ethanol manufacturing sector, and to help create a platform for a wider bio-based economy.

It is estimated that the Ontario Ethanol Growth Fund will result in more than 700 million litres of ethanol being produced in Ontario per year, more than four times the amount currently produced.

Highlights of Proposed Regulation

The draft regulation, posted on the Environmental Registry for public comment, proposes that by January 1, 2007, gasoline sold in Ontario contain an average of five per cent ethanol. This may be accomplished by the actual blending of ethanol, or through the trading of renewable fuel credits.

All ethanol blends will be required to meet technical standards and fuel specifications to ensure quality and drivability.

Wholesalers and importers of gasoline will be held accountable for meeting the requirements. Reporting requirements will be delayed until 2010 for northern Ontario, to allow for infrastructure development.

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Environment and Energy Rural and North